So you’re ready to take the first step in investing and you want to learn the basics.  Don’t worry, I got you. I’m gonna break it down in general terms.

First let’s talk about stocks. Stocks represent ownership in a company. When you buy stock, what you’re really buying are shares of that company. For example, if you buy 10 shares of Apple stock, then guess what? You literally own a piece of the company. Each of those shares represent a small percentage of that company. So if Apple announces a new iPhone or new iWatch or any other product, it usually affects the stock price in some way. Take a look here at some of the other variables that affect the price of a stock.

There are a couple of ways you can make money by investing in stocks. You can make money when the stock price goes up in value to a price higher than what you paid for it. That’s called appreciation. You can also make money on something called dividends. Dividends are payments made by the company to it’s shareholders when the company makes a profit. When you receive a dividend payment you have a couple of choices. You can either receive the cash or you can reinvest the dividend to buy more shares of the company. Keep in mind though, not all companies pay out dividends.

Here’s a little inspiration for you. Take a look at this video from a few years ago with a then 14 year old investor who built up a $50,000 portfolio.